Reduce coal prices; Metropolitan R100m UT fiasco; SA, Nigeria mend fences; Brexit

By Jackie Cameron

  • South Africa is pushing coal producers to cut prices to help save Eskom, the debt-stricken power utility that threatens to unravel the country’s finances, says Bloomberg. “At these prices of electricity, this economy is going to collapse,” Mineral and Energy Resources Minister Gwede Mantashe said Thursday at a mining conference in Johannesburg. “You have got to reduce the prices – what we are saying is coal producers must contribute in ensuring that is actually addressed.” President Cyril Ramaphosa’s government is searching for ways to resolve a deepening financial crisis at a monopoly that’s seen as the biggest threat to the country’s budget and economy. Extracting concessions from coal producers is the latest attempt to cut costs after labour unions repeatedly rejected reducing the company’s bloated workforce. Eskom, which provides about 95% of South Africa’s electricity, relies on coal to generate most of its power.
  • Metropolitan Collective Investments has been fined a whopping R100m by the Financial Conduct Authority in connection with losses incurred by one of its unit trust funds. The Third Circle MET Target Return Fund lost 66% of its value in the three days dubbed Nenegate, which was when financial markets were rocked by the sudden replacement of finance minister Nhlanhla Nene with Jacob Zuma ally Des van Rooyen. The full FCA findings are available below. The FCA essentially accused the fund managers of playing fast and loose with unit trust holders funds by using derivatives structures and did not buy arguments from Metropolitan that this was a ‘black swan’ event or that it is impossible to adhere to the prescribed assets requirements all the time. The findings said that Metropolitan/Third Circle displayed a “reckless indifference” to unit trust holders funds. The FCA essentially accused the fund managers of playing fast and loose with unit trust holders funds by using derivatives structures.
  • SA, Nigeria mend fences, aim to do more business together, following xenophobic attacks in South Africa and anti-xenophobic protests in Nigeria. South Africa and Nigeria agreed to expand the continent’s deepest trade relationship, reports Bloomberg. The two nations signed dozens of accords Thursday that will enable South Africa to leverage the recently agreed African Continental Freed Trade Agreement to tap West African markets. They’ll also boost Nigeria’s efforts to diversify its economy, which relies on oil to generate two-thirds of government revenue and more than 90% of export income. “We have identified key sectors for investment to boost economic growth and development,” South African President Cyril Ramaphosa said at a joint briefing with Nigerian President Muhammadu Buhari.
  • Boris Johnson is winning the battle for Conservative support after outlining his new Brexit proposals in Parliament, says Bloomberg. The prime minister said he has been encouraged by constructive conversations he has had with European Union leaders – but a deal is still some way away. But that does not mean it will be acceptable to the EU. European ambassadors will discuss the proposals this afternoon and officials warn that major stumbling blocks remain. Tory members of Parliament on both sides of the Brexit debate gave their backing to Johnson. If the deal can get through the UK’s ruling party, there is a chance it could pass a vote in the House of Commons.

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